There's a simple, very good reason not to offer free shipping - it can kill your profit on an item. You don't have to gouge the buyer, just charge actual cost of materials+shipping+gas. It's not so simple to just pad the item with that cost and do free shipping because 1) Other sellers seem unphased by offering the item at super cheap prices with free shipping (because they are massive sellers that basically run their entire business via eBay), or 2) It's better to auction the item, and there's no guarantee you'll make what you intend (unless you want to pay eBay a pretty penny for letting you hold your item lest it sells at the price you want).
There's a simple, very good reason to offer free shipping as well - no need to prepack items. For the vast majority of items, shipping costs fall into a pretty small range, so it's useful to just increase the price and pack up upon sale.